Myths being circulated about short sales.

1)  Short Sales are impossible and never get approved.  FALSE

TRUTH:  Short Sales are more difficult, you need to learn a new process, they are NOT impossible.  This is definitely not an impossible process.  While there are no guarantees in any transaction, more and more short sales are being approved monthly. 

 

2)  Banks are NOT accepting Short Sales; They are waiting on a bailout.  FALSE

TRUTH:  The reality is that banks have already been bailed out, and are really trying to do anything they can, within reason, to avoid foreclosing on a property.  More banks are aggressively pursuing Short Sales.  It is strictly business; it costs the bank (in most cases) far less to short sell than to foreclose. 

3)  You must be behind on your mortgage in order to negotiate a short sale.  FALSE

TRUTH:  At one time this was true, but today, this has almost all together reversed.  Today lenders are looking for verifiable hardship, monthly cash flow shortfall or pending shortfall and insolvency.  If you meet these three requirements and are in a position where you will soon not be able to afford your mortgage, now is the time. 

 

4)  Buyers are not interested in short sales and avoid them.  FALSE (mostly)

TRUTH:  Some buyers are not interested because of the time it takes. Especially with time constraints like the first time homebuyer credit or you need to move in by a certain date.  On the other hand, buyers are calling and saying "I only want to look at foreclosures and short sales."  These have become equal Good Deals. 

5)  Listing a home as a short sale is an embarrassment.  FALSE (mostly)

TRUTH:  Most sellers don't want the world to know they can't pay their bills, but according to recent estimates, 1 in 5 homeowners in the US owe more on their house than it is worth.  Even wealthy owners have to stop the bleeding somewhere. 
Most sellers are to be congratulated for admitting they need help, taking action and finding a professional who can work toward a solution. 

6)  There is not enough time to negotiate a short sale before a foreclosure.  FALSE

TRUTH:  This is a myth that hurts homeowners.  Many don't realize that the foreclosure process is lengthy.  It can take a year or more, and if an attorney gets involved, it can be stalled.  Almost all lenders will stall a foreclosure with a legitimate contract for short sale.  So if a lis pendens has been filed, that's just the beginning.  If it is slated for the courthouse steps, hurry up, if there is an offer you may be able to stall.